information about capital gain tax

Dear Sir,

I require your genuine help now.I had purchased a property in 2004 for Rs.400000 (Rupees Four Lacs Only) and have sold the same on 08/03/2012 for Rs.725000 (Rupees Seven Lacs Twenty Five thousand Only). I was informed that if I keep the same with BOI under their Capital gain tax scheme for five years and once the period is over I would be able to utilise the money as it would be free from tax.

Please advice.

Sandeep Butaney 9821207228

asked Apr 12 '12 at 10:27 by sandeepbutaney 112


Please see long term gains and income tax computation first:

Purchase Year = 2004-05, Purchase Cost = 400000, Cost Inflation Index (CII) for purchase year = 480
Sale Year = 2011-12, Selling price = 725000, CII for sale year = 785
Indexed Purchase price = 400000 x (785/480) = 654167
Long term capital gain = 725000 - 654167 = 70833
Income tax on capital gain = 70833 x 20% = 14166.6

Income tax on this gain is just Rs 14,000. You may consider paying this tax and use amount anywhere after that without any lock-in.

Still if you want to save this tax, you can invest into capital gain bonds (u/s 54EC) for three years which would give 6% annual return. If sold property is not a built-up residential house property (flat/house/apartment etc) then whole sale consideration amount would have to be invested to save full income tax. If sold property is a residential house property, only gains part (around 71,000) has to be invested. Investment in these bonds can only be done within six months of sale.

answered Apr 12 '12 at 13:03 by Pankaj Batra 5.2k320

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Asked: Apr 12 '12 at 10:27

Seen: 1,842 times

Last updated: Apr 12 '12 at 13:03